How To Invest
In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
Investors should approach all investments with a healthy sense of skepticism. This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.
If you are a new investor, you should also realize that losing patience can cause you to sell your best choices right before a big rise. All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)
If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.
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ISHARES S&P INDIA NIFTY 50 INDEX FUND $21.48 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com) is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities.
The fund’s top holdings are ITC Ltd. (conglomerate), 8.6%; Reliance Industries Ltd. (conglomerate), 7.5%; ICICI Bank, 6.9%; HDFC Bank, 6.6%; Infosys Technologies (software), 6.6%; Housing Development Finance, 6.3%; Larsen & Toubro Ltd. (conglomerate), 4.5%; Tata Consultancy Services (information technology), 3.9%; and State Bank of India, 3.3%.
The fund’s industry breakdown includes Banks, 19.8%; Computers, 13.3%; Cigarettes, 8.5%; Refineries, 8.1%; Housing, 5.9%; Automobiles, 5.5%; Engineering, 4.6%; Pharmaceuticals, 4.3%; Electricity, 3.8%; and Oil Exploration/Production, 3.8%. The ETF has an expense ratio of 0.89%.
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The fund’s top holdings are ITC Ltd. (conglomerate), 8.6%; Reliance Industries Ltd. (conglomerate), 7.5%; ICICI Bank, 6.9%; HDFC Bank, 6.6%; Infosys Technologies (software), 6.6%; Housing Development Finance, 6.3%; Larsen & Toubro Ltd. (conglomerate), 4.5%; Tata Consultancy Services (information technology), 3.9%; and State Bank of India, 3.3%.
The fund’s industry breakdown includes Banks, 19.8%; Computers, 13.3%; Cigarettes, 8.5%; Refineries, 8.1%; Housing, 5.9%; Automobiles, 5.5%; Engineering, 4.6%; Pharmaceuticals, 4.3%; Electricity, 3.8%; and Oil Exploration/Production, 3.8%. The ETF has an expense ratio of 0.89%.
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ISHARES CDN REIT SECTOR INDEX FUND $17.25 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 13 Canadian real estate investment trusts (REITs) in the S&P/TSX Capped REIT Index. The weight of any one REIT is limited to 25% of the ETF’s value.
iShares CDN REIT’s expenses are 0.55% of its assets. The fund yields 4.3%.
RioCan REIT is the fund’s largest holding at 22.0%, followed by H&R REIT (12.2%), Dundee REIT (8.9%), Canadian REIT (7.7%), Calloway REIT (7.5%), Boardwalk REIT (6.8%), Cominar REIT (6.4%), Canadian Apartment Properties REIT (6.2%), Primaris Retail REIT (5.7%), Artis REIT (5.0%), Allied Properties REIT (4.5%), Chartwell Seniors Housing REIT (2.9%), and Northern Property REIT (2.8%).
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iShares CDN REIT’s expenses are 0.55% of its assets. The fund yields 4.3%.
RioCan REIT is the fund’s largest holding at 22.0%, followed by H&R REIT (12.2%), Dundee REIT (8.9%), Canadian REIT (7.7%), Calloway REIT (7.5%), Boardwalk REIT (6.8%), Cominar REIT (6.4%), Canadian Apartment Properties REIT (6.2%), Primaris Retail REIT (5.7%), Artis REIT (5.0%), Allied Properties REIT (4.5%), Chartwell Seniors Housing REIT (2.9%), and Northern Property REIT (2.8%).
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BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. $29.56 (Toronto symbol BEP.UN; Units outstanding: 132.8 million; Market cap: $3.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.7%; www.brpfund.com) owns 170 hydroelectric generating stations, seven wind farms and two natural-gas-fired plants. In all, it has 4,909 megawatts of generating capacity.
Roughly 35% of Brookfield Renewable’s generating capacity is in Canada, with another 45% in the U.S. and 20% in Brazil. The company sells virtually all of its power under agreements that are an average of 24 years in length.
In the three months ended March 31, 2012, Brookfield’s revenue rose 31.1%, to $430 million from $328 million a year earlier. Cash flow per unit rose 45.6%, to $0.67 from $0.46. The company started up new plants in the quarter. Heavy rainfall also helped it generate more hydroelectric power.
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Roughly 35% of Brookfield Renewable’s generating capacity is in Canada, with another 45% in the U.S. and 20% in Brazil. The company sells virtually all of its power under agreements that are an average of 24 years in length.
In the three months ended March 31, 2012, Brookfield’s revenue rose 31.1%, to $430 million from $328 million a year earlier. Cash flow per unit rose 45.6%, to $0.67 from $0.46. The company started up new plants in the quarter. Heavy rainfall also helped it generate more hydroelectric power.
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BELL ALIANT INC. $25.09 (Toronto symbol BA; Shares outstanding: 227.8 million; Market cap: $5.7 billion; TSINetwork Rating: Average; Dividend yield: 7.6%; www.aliant.ca) sells telephone and Internet services to 2.8 million customers in Atlantic Canada, as well as rural parts of Ontario and Quebec. The company also sells wireless services through an alliance with BCE, which owns 43.8% of Bell Aliant.
The company faces strong competition from cable providers. In addition, many of its phone customers are switching to wireless devices. However, Bell Aliant’s wireless agreement with BCE, plus upgrades to its high-speed Internet network, are helping it hold on to its current clients and attract new ones.
Bell Aliant’s high-speed fibre optic systems now reach 458,000 homes. The company plans to increase that to 650,000 by the end of 2012. Its capital expenditures were $177 million in the latest quarter, up 14.8% from a year earlier.
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The company faces strong competition from cable providers. In addition, many of its phone customers are switching to wireless devices. However, Bell Aliant’s wireless agreement with BCE, plus upgrades to its high-speed Internet network, are helping it hold on to its current clients and attract new ones.
Bell Aliant’s high-speed fibre optic systems now reach 458,000 homes. The company plans to increase that to 650,000 by the end of 2012. Its capital expenditures were $177 million in the latest quarter, up 14.8% from a year earlier.
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PENGROWTH ENERGY $6.44 (Toronto symbol PGF; Shares outstanding: 498.5 million; Market cap: $3.2 billion; TSINetwork Rating: Average; Dividend yield: 7.5%; www.pengrowth.com) has cut its monthly dividend by 42.9%, to $0.04 a share from $0.07. With the cut, the new annual dividend rate of $0.48 a share yields 7.5%.
The company’s selling prices for oil and natural gas have fallen, and it wants to conserve cash for potential acquisitions and investments in promising new projects, such as its Lindbergh oil sands development in Alberta.
The savings will also help Pengrowth integrate oil producer NAL Energy Corp., which it recently purchased.
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The company’s selling prices for oil and natural gas have fallen, and it wants to conserve cash for potential acquisitions and investments in promising new projects, such as its Lindbergh oil sands development in Alberta.
The savings will also help Pengrowth integrate oil producer NAL Energy Corp., which it recently purchased.
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PENN WEST PETROLEUM $13.81 (Toronto symbol PWT; Shares outstanding: 472.9 million; Market cap: $6.5 billion; TSINetwork Rating: Average; Dividend yield: 7.8%) is one of North America’s largest oil and gas producers. Its average daily output of 167,420 barrels of oil equivalent is weighted 64% to oil and 36% to natural gas.
In the three months ended March 31, 2012, Penn West’s cash flow per share fell 7.8%, to $0.71 from $0.77, mostly due to lower gas prices.
The company’s shares yield a high 7.8%, but it paid out just 38% of its cash flow as dividends in the latest quarter. That gives it the funds to keep dividends high and yet keep increasing production.
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In the three months ended March 31, 2012, Penn West’s cash flow per share fell 7.8%, to $0.71 from $0.77, mostly due to lower gas prices.
The company’s shares yield a high 7.8%, but it paid out just 38% of its cash flow as dividends in the latest quarter. That gives it the funds to keep dividends high and yet keep increasing production.
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CRESCENT POINT ENERGY CORP. $39.62 (Toronto symbol CPG; Shares outstanding: 329.1 million; Market cap: $13.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 7.0%; www.crescentpointenergy.com) produces oil and natural gas in western Canada. Its production is weighted 91% toward oil and 9% to gas.
The company continues to focus on its Bakken light-oil development in southeastern Saskatchewan.
In the three months ended March 31, 2012, Crescent Point’s cash flow per share rose 21.8%, to $1.34 from $1.10. The company’s shares yield a high 6.8%. Crescent Point paid out just 53% of its cash flow as dividends in the latest quarter, so its current dividend rate looks sustainable.
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The company continues to focus on its Bakken light-oil development in southeastern Saskatchewan.
In the three months ended March 31, 2012, Crescent Point’s cash flow per share rose 21.8%, to $1.34 from $1.10. The company’s shares yield a high 6.8%. Crescent Point paid out just 53% of its cash flow as dividends in the latest quarter, so its current dividend rate looks sustainable.
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RIOCAN REAL ESTATE INVESTMENT TRUST $28.36 (Toronto symbol REI.UN; Units outstanding: 285.9 million; Market cap: $8.1 billion; TSINetwork Rating: Average; Dividend yield: 4.9%; www.riocan.com) is purchasing the Georgian Mall, a shopping centre in Barrie, Ontario, with over 150 stores. This will be RioCan’s largest, most prominent enclosed mall property.
The trust will pay $318 million for the shopping centre when the deal closes in the third quarter of 2012. That’s equal to 93% of the $342 million, or $1.20 a unit, that RioCan earned in the first quarter of 2012.
This mall is 97% leased and gets 91% of its rental revenue from national chains. That cuts the risk of this purchase. Moreover, Barrie’s population should rise by 20% over the next decade.
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The trust will pay $318 million for the shopping centre when the deal closes in the third quarter of 2012. That’s equal to 93% of the $342 million, or $1.20 a unit, that RioCan earned in the first quarter of 2012.
This mall is 97% leased and gets 91% of its rental revenue from national chains. That cuts the risk of this purchase. Moreover, Barrie’s population should rise by 20% over the next decade.
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GUGGENHEIM CHINA SMALL CAP ETF $19.04 (New York Exchange symbol HAO; buy or sell through brokers; www.guggenheimfunds.com) aims to track the AlphaShares China Small Cap Index, which is made up of all Chinese stocks that are legal for foreign investors and have market caps between $200 million and $1.5 billion.
The $155.7-million fund’s top holdings are Shimao Property Holdings, 1.7%; Longfor Properties, 1.6%; Sino-Ocean Land Holding, 1.5%; Guangdong Investment, 1.5%; Tsingtao Brewery Co., 1.4%; China Railway Group, 1.4%; China Railway Construction Corp., 1.4%; Zoomlion Heavy Industry, 1.4%; Agile Property Holdings, 1.3%; and China State Construction International Holdings, 1.2%.
As China’s economy matures, domestic spending should continue to rise. As well, China’s leaders will likely need to increase spending on programs and services to ease the growing gap between the rich and poor. Guggenheim China Small Cap ETF is well positioned to benefit from both of these trends.
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The $155.7-million fund’s top holdings are Shimao Property Holdings, 1.7%; Longfor Properties, 1.6%; Sino-Ocean Land Holding, 1.5%; Guangdong Investment, 1.5%; Tsingtao Brewery Co., 1.4%; China Railway Group, 1.4%; China Railway Construction Corp., 1.4%; Zoomlion Heavy Industry, 1.4%; Agile Property Holdings, 1.3%; and China State Construction International Holdings, 1.2%.
As China’s economy matures, domestic spending should continue to rise. As well, China’s leaders will likely need to increase spending on programs and services to ease the growing gap between the rich and poor. Guggenheim China Small Cap ETF is well positioned to benefit from both of these trends.
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SPDR S&P CHINA ETF $63.27 (New York Exchange symbol GXC; buy or sell through brokers; www.spdrs.com) is an exchange traded fund that aims to track the S&P China BMI Index, which is made up of all the publicly traded Chinese stocks that are available to foreign investors. Right now, SPDR S&P China ETF holds 184 stocks.
The $783.8-million fund’s top holdings are China Mobile, 9.1%; China Construction Bank, 6.9%; Baidu, 5.1%; CNOOC, 4.8%; Industrial & Commercial Bank, 4.7%; Tencent Holdings, 4.5%; Petro- China, 4.0%; Bank of China, 3.6%; China Life Insurance, 3.2%; and China Petroleum & Chemical, 2.3%.
The fund’s breakdown by industry is as follows: Financials, 31.7%; Oil and Gas, 15.2%; Information Technology, 13.2%; Telecommunication Services, 10.1%; Industrials, 10.4%; Consumer Staples, 5.0%; Consumer Discretionary, 4.3%; Basic Materials, 4.0%; Utilities, 2.8%; and Health Care, 1.7%.
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The $783.8-million fund’s top holdings are China Mobile, 9.1%; China Construction Bank, 6.9%; Baidu, 5.1%; CNOOC, 4.8%; Industrial & Commercial Bank, 4.7%; Tencent Holdings, 4.5%; Petro- China, 4.0%; Bank of China, 3.6%; China Life Insurance, 3.2%; and China Petroleum & Chemical, 2.3%.
The fund’s breakdown by industry is as follows: Financials, 31.7%; Oil and Gas, 15.2%; Information Technology, 13.2%; Telecommunication Services, 10.1%; Industrials, 10.4%; Consumer Staples, 5.0%; Consumer Discretionary, 4.3%; Basic Materials, 4.0%; Utilities, 2.8%; and Health Care, 1.7%.
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